Outlook is not correctly configured to authenticate when sending email.

Open Outlook
From the Tools menu select Account Settings. The Account Settings box appears.
Verify that the E-mail tab is selected. Your email account appears, usually labeled mail.yourdomain.com
Click on the account to highlight it, and click on the Change icon above it. The Internet E-mail Settings appear.
Click the button More Settings… in the lower right-hand corner. The Internet Email Settings box appears.
Click on the tab Outgoing Server.
Click the check box My outgoing server (SMTP) requires authentication, and verify that the circle-box Use same settings as my incoming mail server is selected.
Click OK to close the Internet Email Settings box.
IMPORTANT: Do NOT use the “Test Account Setting…” button to test the settings. This will fail.
Click the Finish button to close the Internet E-mail Settings box. Click the Close button to close the Account Settings box. SMTP authentication has now been enabled.